It is estimated that counterfeit and pirated items from China and Hong Kong alone cost genuine businesses between $250 and 750 billion dollars in lost sales each year. In order to stimulate innovation and safeguard firms from infringers and counterfeiters, intellectual property enforcement is essential.
Because China and Hong Kong are two separate jurisdictions with distinct legal systems, the IP frameworks and enforcement procedures in the two jurisdictions differ. In these two jurisdictions, it is prudent for business owners to grasp their positions and artillery for pursuing their IP rights.
This page provides an overview of the numerous IP enforcement tools available in Hong Kong and China, as well as practical recommendations for efficient enforcement.
Enforcement of IP rights in Hong Kong
Issuing Cease and Desist letter
In essence, a Cease and Desist letter serves as a warning to infringers, requiring them to cease infringing actions and/or take corrective action by a specific deadline, failing which the IP right owners may pursue legal action against the infringers.
This technique is especially beneficial for trademark infringement in Hong Kong, where both registered and unregistered trademarks are protected by Hong Kong law’s Trade Marks Ordinance and the common law position of passing off (misleading company reputation/goodwill).
This is a quick and low-cost method of enforcement since IP right owners can safeguard their rights without having to go through lengthy and expensive judicial proceedings.
Furthermore, the issuance of a Cease and Desist letter is normally a pre-requisite for litigation, as both parties must endeavour to resolve their dispute peacefully before heading to court, or else there may be financial implications if the subject advances to court procedures.
It’s worth noting that issuing a Cease and Desist letter for patent or registered design infringement in Hong Kong requires extra caution because threatening to bring legal action for these forms of infringement is illegal. As a result, IP right holders should be wary of issuing unfounded threats or risk having to pay compensation, and should only issue Cease and Desist letters when there is concrete evidence of infringement.
Hong Kong Customs Recordal
The Hong Kong Customs and Excise Department is in charge of enforcing the criminal aspects of IP infringement and has broad search and seizure authority over infringers. It helps IP owners assert their rights by implementing border enforcement and market investigation procedures. It has the ability to capture counterfeit items everywhere in Hong Kong, not just the harbour and border areas.
To enforce IP rights against infringers through Hong Kong Customs, IP owners must (1) provide an affidavit of copyright ownership (for copyright infringement) or a copy of the trademark registration certificate (for trademark infringement), (2) provide a sample of each genuine and infringing product, and (3) appoint a Qualified Examiner who can distinguish between counterfeits and genuine products.
Once a Customs Recordal is completed (no official fee is necessary) and the Qualified Examiner’s competence as a trustworthy expert witness in future criminal prosecution court proceedings has been validated, the Customs will raid the infringers and take administrative action against them.
IP owners may file civil lawsuits against infringers in Hong Kong courts. The courts in Hong Kong are sophisticated and well-equipped to handle IP matters, thanks to the creation of an Intellectual Property Specialist List in Hong Kong courts, which lists all IP trials before judges who are experts in the field.
Hong Kong’s strong courts are eager to issue injunctions to curb infringement activity. in a timely fashion. In addition, the damages awarded to the winning party is relatively high compared to other jurisdictions.
However, a typical court action in Hong Kong can take up to 3-5 years, and the legal costs incurred could be high. That said, the winning party would usually be awarded damages and portion of the legal costs. It is also not uncommon for both parties to reach settlement once an injunction is granted.
One should note that before commencing civil litigation in Hong Kong, both parties will be requested by the court to conduct a round of mediation, failing which there will be cost consequences.
Enforcement of IP rights in China
Unregistered IP rights in China, unlike Hong Kong, are only protected by unfair competition laws and/or well-known trademarks, both of which are difficult to establish under Chinese law. As a result, prior to pursuing any enforcement options in China, IP rights must be registered in China. We strongly advise any company conducting business in China, whether manufacturing, retailing, or trading in any other way, to register their trademarks as soon as possible to avoid other parties registering their IP rights (including an identical or similar trademark).
China Customs Recordal
IP rights can be recorded with China Customs, which is responsible for preventing the export and import of items from and to China that infringe on IP rights. If Customs finds suspected infringing items on record during a routine inspection after an IP right has been recorded, Customs will suspend the goods and notify the relevant IP right holder of the alleged infringement. Customs will formally detain the items awaiting further inquiry if the IP right holder acknowledges the infringement, applies for detention of the goods, and pays the required deposit as a guarantee. Customs may confiscate infringing goods and impose penalties on the consignor or consignee if it is established that the detained goods are counterfeits.
Alternatively, if IP property holders find that the items being imported or exported are counterfeits, they may request that the commodities be detained by Customs. IP right holders should produce evidence that the items are counterfeits and deposit a guarantee equal to the value of the detained goods in order to do so.
China Customs Recordal is very timely and cost effective, with an official fee of RMB 800 (about US$100) for filing Customs Recordal. Unlike Hong Kong Customs, China does not require the appointment of a Qualified Examiner, and all applications and evidence submissions can be completed entirely online. As a result, China Customs Recordal is one of China’s most effective means of IP enforcement.
Administrative actions
The Intellectual Property Offices (IPOs) handle patent cases, the Administrations for Industry and Commerce (AICs) handle trademark cases, and the Copyright Office handles copyright issues in China.
These administrative agencies have a broad range of enforcement powers against infringers, including raiding infringers’ premises, seizing and destroying infringing items, issuing injunctions, and levying fines.
Administrative actions are reasonably quick and inexpensive, but IP owners must direct legal counsel to file the application with supporting evidence of IP right ownership and evidence of infringement.
Online take down notices
If internet providers are alerted of infringement actions and fail to remove links to the relevant website, they are liable under Chinese law for IP infringement. As a result, most Chinese internet providers have their own protocols in place for such takedown notices.
In general, they require (1) evidence that the complainant is the IP right holder, (2) linkages to the infringing activity, and (3) the IP right holder’s business licence.
Because the requirements are very simple, an online take down notice is a very cost-effective and expedient approach to deal with internet infringements in China.
Commencing civil litigation in Chinese courts
In China, there are IP courts in Beijing, Shanghai, and Guangzhou, which specialise in handling IP cases. Injunctions, destruction of infringing items, damages, and orders for delivery up are some of the common remedies pursued. Furthermore, from the issuance of proceedings to the handing down of judgement, a typical IP case would take 1 to 1.5 years, which is quite short when compared to its Hong Kong counterpart.
In order to show IP infringement in court in China, all supporting documentation must be notarized by a notary public. In practise, this means a notary must witness the process of gathering the evidence, including the test purchase of the infringing articles. public. This will add difficulties to providing sufficient notarized evidence to satisfy the burden of proof in Chinese court proceedings.
Furthermore, many local court judges and juries in China are unfamiliar with IP law, and a fair outcome may be obtained only after the cases are appealed to a higher or even top level court (most notably the Michael Jordan case, where the US basketball player Michael Jordan successfully obtained favourable results against a long-lasting trade mark squatter in China only when the case had been appealed to the Supreme Court of China).
Conclusion
To summarise, business owners doing business in Hong Kong and China must guarantee that all of their intellectual property rights are registered in both countries because the legal systems are separate. This would be for trade marks, patents, and other intellectual property in Hong Kong. In Hong Kong, this would be for trade marks, patents and registered designs (no copyright registration is available). In China, this would be for patents, trademarks, and specifically including copyright.
About the Author:
Ella Cheong founded Ella Cheong & Alan Chiu, Solicitors & Notaries (formerly known as Ella Cheong Law Office), Ella Cheong (Hong Kong & Beijing), Ella Cheong (Hong Kong & Beijing), Ella Cheong (Hong Kong & Beijing), Ella Cheong (Hong Kong & Beijing), Ella Cheong (Hong Kong & Beijing), Ella Cheong (Hong Kong & Beijing), Ella Cheong (Hong She provides talks on all elements of intellectual property on a regular basis. She has also written a number of papers on the subject of intellectual property. Ella was inducted into the International Academy of Modeling (IAM) in 2018. She was named an IP Legend and a luminaire in the most recent edition of World Trademark Review 2019.
